Investing

January 5, 2004 8:00 PM

with the freefall of the dollar - should one find themselves fortunate enough to have a few in the bank, what do the nice folks here recommend to hedge ones position?
posted by specialk420 to work & money (18 comments total)

I don't know about anyone else, but I spend them as fast as I get them in order to get the most value out of them.
posted by mr_crash_davis at 8:09 PM on January 5, 2004

i'm sure amazon.com appreciates your approach :) . next!?
posted by specialk420 at 8:31 PM on January 5, 2004

gold's doing well, and euros, and pounds (even canadian dollars) Maybe a euro fund? You're safe with euros going up until the election.
posted by amberglow at 8:41 PM on January 5, 2004

You should buy low and sell high in almost all of your financial endeavors. This means if you're getting paid in dollars right now you should probably hold onto them. No financial trend lasts forever, and if the dollar is really low now, there's a good chance it'll turn around at some point and the cycle will go the other way.

Buying euros when euros are expensive is a good way to go broke, unless you have reason to believe that the dollar is going to drop a lot more.
posted by bshort at 9:21 PM on January 5, 2004

bshort - but that might just be a reasonable expectation, given the current borrowing habits of Americans and their government.

Gold. Euros. Whatever - It's all a gamble, of course.
posted by troutfishing at 10:26 PM on January 5, 2004

I'd bet on the US dollar dropping at least for another year.
posted by troutfishing at 10:27 PM on January 5, 2004

i'm with you trout. thus the question.
posted by specialk420 at 10:40 PM on January 5, 2004

The falling dollar will mean increased US exports (our stuff is cheaper now) which will boost the economy, which is good. The problem will arise if foreign investors decide to stop buying into the US then we have a problem. But that won't happen without a lot of other things happening first to be worried about.

If you want to research how to make money due to the falling dollar (currency investing) I asked the same question on answers.google.com and got a pretty good answer.
posted by stbalbach at 10:41 PM on January 5, 2004

If you're looking to keep the value of your money fairly consistent (not up or down by too much), I would suggest buying bars of gold and having the spread over a few banks, if you have THAT much money. Families have kept wealth within their families for generations based on precious metals and stones. If you're looking to earn money, start spending some time researching consistent companies or mutual funds that are worth a large investment. In my opinion, investing in stocks and bonds requires months of analysis and constant attention, but the rewards can be great. But don't invest for a year. Invest for 10.
posted by BlueTrain at 10:41 PM on January 5, 2004

thanks for the tip stbalbach - starting to head in the direction i was looking for - how to best manage shortterm/emergency/liquid funds - when the dollar in a freefall ... bluetrain. thanks as well. im covered on the longer term front.
posted by specialk420 at 11:12 PM on January 5, 2004

Turning the question around - as a European, what's the best way to make money out of the dollar situation? Is it simply to go to the USA and buy some cheap goods?
posted by skylar at 4:39 AM on January 6, 2004

skylar: That's one good way; I'm intending to take advantage of the weak dollar and buy a new digital camera for a fair bit less than I could have done a few months ago. Might also be worth considering going on holiday to the US, since your Euros or £s will be worth much more now.
posted by adrianhon at 6:55 AM on January 6, 2004

how to best manage shortterm/emergency/liquid funds

liquid = cash = money market or checking account
short-term = money market, cd's, bonds
emergency = safe deposit box

I know one guy who has put $60,000 in cash in a safe deposit box as an emergency portfolio. You can't get that much cash from any bank anytime so he had to withdraw it in < $10,000 incriments (to stay under the IRS and who knows who else radar) over time and build it up.
posted by stbalbach at 8:26 AM on January 6, 2004

Might also be worth considering going on holiday to the US

I very much doubt that's worth considering, given the kind of hell that the US is putting visitors through.

If you're really worried about the future, paying down your mortgage may be the best investment: that way even if the economy goes tits-up, you've at least got a place to live.
posted by five fresh fish at 9:47 AM on January 6, 2004

fff: Ah, but apparently Europeans are exempt from all the fingerprinting and suchlike that have just been introduced :) But your point is taken.
posted by adrianhon at 10:14 AM on January 6, 2004

My strategy is to buy MORE US dollars now, or maybe in a few months, with my Canadian dollars. Eventually, when the pendulum swings back (barring a US dollar crisis or something seemingly impossible but hey, who the hell knows?), those US dollars regain strength.
posted by Big Fat Tycoon at 3:07 PM on January 6, 2004

Just wait until oil gets repriced in euros. Then you'll really see a falling dollar.
posted by monju_bosatsu at 3:56 PM on January 6, 2004

From most volatile to least volatile:

Gold and silver mining stocks
Gold and silver
Foreign stocks
Foreign bonds
Broad-based natural resources fund (timber, oil, metals)
US Exporter funds (Like Fidelity Export and Multinational)
Treasury Inflation Protected Securities/ I-bonds
posted by trharlan at 7:04 AM on January 7, 2004 [1 favorite has favorites]